The TGF-beta family represents a class of signaling molecules that plays a central role in normal embryonic development including the developing mammalian secondary palate. Within the past few years, a family of very highly conserved proteins, Smads, which are essential components of the TGF-beta l signaling pathways, has been identified. This revised application proposes an exploration of TGF-beta/Smad cytoplasmic and nuclear signal transduction in embryonic palatal tissue. Specific studies include definition of Smads 1-8 mRNA and protein expression and distribution during palate ontogeny, an analysis of the functional role that TGF-beta/Smad signaling may play during palatal tissue differentiation, an analysis of a specific molecular mechanism by which TGF-beta induced growth inhibition may be mediated in embryonic palatal tissue and an exploration of a molecular mechanism by which TGF-beta signaling may regulate transcriptional responses. The current application proposes to test the following five hypotheses. First, Smads are expressed in distinct spatio-temporal patterns in developing palatal tissue. Second, TFG-beta induced inhibition of mesenchymal cell proliferation and/or palate medial edge epithelial differentiation is Smad mediated. Third, TGF-beta induced growth inhibition in embryonic palatal tissue is effected by a Smad-mediated up-regulation of cyclin-dependent kinase inhibitors. Fourth, Smads and the nuclear transcription factor CREB associate in a TGF-beta-stimulated DNA-binding complex to mediate transduction of the TGF-beta signal. Fifth, Smads associate with non-CREB transcription factors to form a DNA-binding complex. Craniofacial malformations occur with a frequency of 1 in 600 live births annually in the United States. This translates into the startling fact that, on average, a baby is born with a cleft in this country every hour of every day. Thus, approximately 8-9000 new cleft babies are born each year. Causes of abnormal formation of the palate are largely unknown. Hence, studies such as those proposed herein will define and clarify molecular regulatory mechanisms underlying the etiology of palatal clefts.